Vandalia seeks Auditor’s assistance with arts funds

Financial reporting not done to state standards

VANDALIA — Internal discussions at the City of Vandalia recently prompted the city to seek the advice of the Auditor of State regarding funds designated to benefit the arts in Vandalia.

At issue are two funds being held at the Dayton Foundation containing nearly $1 million in two separate arts funds: Vandalia Cultural Arts Fund (VCAF) and the Public Art in Vandalia Fund (PAIV) – and whether the money in the funds is in fact public money that should be accounted for through the city’s normal accounting procedures.

The source of the funds in both accounts were annual donations made by the city as well as interest income and returns on investments. The most recent donation by the city was $35,536.65 in 2016. That net amount was the remainder of City Council’s $55,000 donation after expenses were paid for the two funds in 2016.

In a letter sent in April to Scott Bowser, the Auditor of State’s West Region Assistant Chief Auditor, City Attorney Gerald McDonald states that “it is the city’s belief that the funds at issue should not be treated as ‘public funds’ subject to the requirements of the Ohio Revised Code Chapter 135 or other similar municipal accounting requirements once they have been donated to a third party for a public expense.”

Bowser agreed with McDonald’s conclusions in an email on May 3 to McDonald’s legal secretary.

“…we do not take issue with the conclusion reached in your Legal Opinion regarding this matter,” Bowser wrote. He went on to say that any changes in the future may require revisiting the issue.

The Cultural Arts Fund, however, is city-owned money, and as such, needs to be handled in accordance with Ohio’s financial reporting and standard accounting practices. That has not always been the case according to McDonald.

“The money in the Cultural Arts Fund is, and always was, public money and should be reported by the city as its money and should be accounted for by the city in its records and it has not been,” said McDonald.

The Vandalia Drummer News has received hundreds of pages of public records requested in connection to this matter and will be reporting its findings in coming days.

The question of how to handle these funds has always been a tricky one according to McDonald. Previous City Managers and Finance Directors believed once the money was sent to the Dayton Foundation it was out of the city’s control. Current and former Finance Directors had expressed concerns about the funds’ status throughout the years, calling it a “grey area.”

“Unfortunately from a legal perspective I don’t think that was the case,” said McDonald. “There was no wrong doing. We now realize it and are going to fix it.”

Those questions prompted a meeting on April 11 with representatives of the City, Auditor of State, and the Dayton Foundation to get clarification.

“The bottom line is that it appears that we may not have been reporting these expenses in a manner that conforms with the State’s strict standards for public funds,” Crusey said in a press release. “Our desire to identify and correct any possible errors in our process is why we’ve initiated this review.”

He said the city is working with the Auditor “to create a process that conforms to the state’s reporting standards.”

Crusey said that transparency and accountability are of the “utmost importance” which is why the City asked the Auditor for assistance.

“Our Finance Department has received the Ohio Auditor of State Award with Distinction in financial reporting for 26 consecutive years,” Crusey said. “We take our obligation as a steward of public monies very seriously, and want to be sure our policies and procedures follow State guidelines.”